Pound pulls back as concerns surround GDP growth

Sterling is trading lower across the board today after the latest UK GDP figures revealed a worrying reliance on consumer spending which has continued to outstrip real wage growth. The FTSE 100 is little changed and trades lower by around 5 points at the time of writing.

Unsustainable consumer spending

Despite the UK economy growing by 0.4% in the 3 months to September, which was inline with expectations, there are some worrying signs that a slowdown lies ahead. When you consider that this growth has been fuelled by a 0.6% rise in consumer spending there are serious questions raised as to the sustainability of this level of economic performance going forward. A change in vehicle excise duty saw a rush to increase spending on cars, and this was one of the main drivers of the rise amongst consumers. The boost is likely to be short-lived however. These figures come less than 24 hours after the OBR made several downward revisions to their growth forecasts with lower than previously thought productivity in the years ahead seen as a dampening force on economic growth. Whilst the pound has seen some selling today it remains higher on the week and the exchange rate against the US dollar came within a whisker of hitting a 7-week high during the Asian session after moving above the 1.33 handle.

Centrica shares drop by most in 20 years

There has been some widespread selling seen in Centrica this morning with the owner of British Gas forced to reassure investors that it would maintain its dividend despite heavy customer losses and an increasing pressure to cut prices. A decline in excess of 16% marks the largest drop since 1997 - shortly after the firm was listed - and investors are seemingly bailing out of the stock after the firm announced that more than 800,000 domestic energy customers had taken their business elsewhere in just four months.  ​